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Credit Acceptance (CACC) Gains on Q4 Earnings Beat, Revenue Rise
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Shares of Credit Acceptance Corporation (CACC - Free Report) gained 2.4% in the after-market trading following the release of its fourth-quarter and 2023 results. Quarterly earnings of $7.29 per share surpassed the Zacks Consensus Estimate of $4.52 by a significant margin. However, the bottom line reflects a 23.9% fall from the prior-year quarter. These figures include certain non-recurring items.
Results were aided by an improvement in GAAP revenues and consumer loan assignment volumes. However, higher operating expenses and provisions were the undermining factors.
Excluding non-recurring items, net income was $129.1 million or $10.06 per share, down from $156.1 million or $11.74 per share in the prior-year quarter.
For 2023, earnings per share of $21.99 surpassed the Zacks Consensus Estimate of $19.38. The bottom line declined 44.1% from the previous year. Excluding non-recurring items, net income was $535.6 million or $41.17 per share, down from $720.1 million or $52.85 per share in 2022.
GAAP Revenues Improve, Operating Expenses Rise
Total quarterly GAAP revenues were $491.6 million, up 7.1% year over year. An increase in finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $478.8 million.
Full-year GAAP revenues were $1.90 billion, up 3.8% year over year. The top line beat the Zacks Consensus Estimate of $1.89 billion.
Provision for credit losses was $163.7 million in the reported quarter, up 25.6% year over year. Our estimate for the metric was $185.9 million.
Operating expenses of $114.3 million increased 10% year over year. We had projected operating expenses of $126.4 million.
As of Dec 31, 2023, net loans receivables were $6.96 billion, up 10.4% from the December 2022 level. Our estimate for the metric was $6.55 billion.
Total assets were $7.61 billion as of the same date, up from $6.90 billion as of Dec 31, 2022. Total shareholders’ equity was $1.75 billion, up 8%.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 26.7% and 21.3%, respectively, on a year-over-year basis.
Our Take
Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth to an extent in the near term. Moreover, poor asset quality might hamper financials. Nevertheless, the company remains well-poised for revenue growth, given the gradual increase in demand for consumer loans.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
Ally Financial’s (ALLY - Free Report) fourth-quarter 2023 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate by a penny. However, the bottom line reflects a decline of 58.3% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors for ALLY.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2023 adjusted earnings per share of 70 cents, missing the Zacks Consensus Estimate of 77 cents. Also, the bottom line was lower than the prior-year quarter’s 76 cents.
NAVI’s results were adversely impacted by a fall in total other income and core net interest income. A rise in expenses acted as another headwind. Nonetheless, strategic actions announced by NAVI will support its financials in the upcoming period.
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Credit Acceptance (CACC) Gains on Q4 Earnings Beat, Revenue Rise
Shares of Credit Acceptance Corporation (CACC - Free Report) gained 2.4% in the after-market trading following the release of its fourth-quarter and 2023 results. Quarterly earnings of $7.29 per share surpassed the Zacks Consensus Estimate of $4.52 by a significant margin. However, the bottom line reflects a 23.9% fall from the prior-year quarter. These figures include certain non-recurring items.
Results were aided by an improvement in GAAP revenues and consumer loan assignment volumes. However, higher operating expenses and provisions were the undermining factors.
Excluding non-recurring items, net income was $129.1 million or $10.06 per share, down from $156.1 million or $11.74 per share in the prior-year quarter.
For 2023, earnings per share of $21.99 surpassed the Zacks Consensus Estimate of $19.38. The bottom line declined 44.1% from the previous year. Excluding non-recurring items, net income was $535.6 million or $41.17 per share, down from $720.1 million or $52.85 per share in 2022.
GAAP Revenues Improve, Operating Expenses Rise
Total quarterly GAAP revenues were $491.6 million, up 7.1% year over year. An increase in finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $478.8 million.
Full-year GAAP revenues were $1.90 billion, up 3.8% year over year. The top line beat the Zacks Consensus Estimate of $1.89 billion.
Provision for credit losses was $163.7 million in the reported quarter, up 25.6% year over year. Our estimate for the metric was $185.9 million.
Operating expenses of $114.3 million increased 10% year over year. We had projected operating expenses of $126.4 million.
As of Dec 31, 2023, net loans receivables were $6.96 billion, up 10.4% from the December 2022 level. Our estimate for the metric was $6.55 billion.
Total assets were $7.61 billion as of the same date, up from $6.90 billion as of Dec 31, 2022. Total shareholders’ equity was $1.75 billion, up 8%.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 26.7% and 21.3%, respectively, on a year-over-year basis.
Our Take
Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth to an extent in the near term. Moreover, poor asset quality might hamper financials. Nevertheless, the company remains well-poised for revenue growth, given the gradual increase in demand for consumer loans.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
Credit Acceptance Corporation price-consensus-eps-surprise-chart | Credit Acceptance Corporation Quote
Currently, Credit Acceptance carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Consumer Loan Providers
Ally Financial’s (ALLY - Free Report) fourth-quarter 2023 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate by a penny. However, the bottom line reflects a decline of 58.3% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors for ALLY.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2023 adjusted earnings per share of 70 cents, missing the Zacks Consensus Estimate of 77 cents. Also, the bottom line was lower than the prior-year quarter’s 76 cents.
NAVI’s results were adversely impacted by a fall in total other income and core net interest income. A rise in expenses acted as another headwind. Nonetheless, strategic actions announced by NAVI will support its financials in the upcoming period.